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New Mexico governor seeking solution on budget crunch

SANTA FE, N.M. — New Mexico Gov. Susana Martinez indicated Tuesday that the state may be headed toward a special legislative session to address dwindling state operating reserves.

The Republican governor told members of the State Investment Council that her office has been working for weeks with executive agencies and a key legislative committee on how to resolve the state’s fiscal imbalance.

New Mexico is one of several states dealing with declines in the general fund linked to reduced energy prices and production. Where some states have tapped rainy day funds or raised taxes, New Mexico has allowed its operating reserves to plunge.

Martinez said a solution may involve a short, pre-negotiated legislative session, without indicating exactly how the state would meet spending commitments. The governor has called the special sessions of the legislature twice before to resolve issues of electoral redistricting and spending on public works projects.

“I’d really like to see this resolved, as we did (at a) special session over at the capitol, before we walk in,” Martinez said. “And it’s a four-hour session.”

Michael Lonergan, a spokesman for the governor, said Martinez views changes in oil and gas revenues as a “real threat to our state budget.”

“In the coming days, there will be focused discussions with key legislative leaders,” he said in an email. “The governor strongly opposes any tax increases.”

New Mexico is confronting an estimated $159 million general-fund shortfall for the budget year that ended in June, according to a report this month from the Legislative Finance Committee that drafts the annual state budget. Relatively low oil and natural gas prices have driven down royalties and severance tax revenues and contributed to a decline in other tax receipts.

Sen. John Arthur Smith, chairman of that committee, has warned that anywhere from $300 million to a half-billion dollars in projected state revenue could fail to materialize during the fiscal year that began in July. A new state revenue forecast is scheduled for late August.

The Democrat from Deming has urged the governor to plan for a special legislative session as soon as possible and not wait until the next regular session in January.

“If we’re going to have a $300 million or $500 million shortfall on a $6 billion budget,” he said Tuesday, “we’re going to be telling agencies and schools to put on the brakes rapidly. If you delay putting on those brakes, you’ve got fewer ways to react.”

Martinez addressed the budget issues briefly on Tuesday at a public meeting of the State Investment Council. The council discussed whether to shift investments to help conserve funds in the state’s $224 million Tobacco Settlement Permanent Fund, without taking action. The fund, created in 2000 under a settlement with big tobacco companies, can be tapped to shore up New Mexico’s operating reserves with special approval by the Legislature and the governor’s consent to avoid a veto.

Smith said the state will have little choice but to tap the tobacco funds if it wants to replenish exhausted reserves.

New Mexico already has swept small piles of cash from idle accounts and given state agencies authority to transfer funds between programs in an effort to cope. Select jobs are being eliminated at the Department of Cultural Affairs that oversees public museums and historical sites across New Mexico and at New Mexico State University.

Martinez has resisted calls to consider tax increases from some Democratic lawmakers and Republicans, including State Land Commissioner Aubrey Dunn.

Senate Majority Floor Leader Michael Sanchez, D-Belen, said in a statement Tuesday that delaying action on the budget is likely to make matter worse later. “We are already spending money we do not have,” he said.